Bitcoin is destroying the planet. At least, that’s the narrative you’re being told. Headlines such as “Bitcoin is terrible for the planet,” “Bitcoin will burn the planet down,” and “Why Bitcoin is bad for the environment” dominate our social media feeds. Politicians are reinforcing this narrative. Recently, Sen. Elizabeth Warren tweeted that we must “crack down on environmentally wasteful cryptocurrencies,” while Treasury Secretary Janet Yellen called Bitcoin “extremely inefficient” and attacked the amount of energy it uses.
Unfortunately for the critics, but fortunately for the planet, this narrative is wrong. Not only does it distort basic facts and statistics, but it also misunderstands the proactive role Bitcoin can play in accelerating a clean energy future.
First, let’s place things in perspective. Bitcoin’s climate footprint pales in comparison to the digital technology industry, representing only 2.3% of total emissions. Compared to the global banking and gold mining industries, Bitcoin only consumes 40% as much energy as either.
Reliant on physical offices, the production of coins and notes, and vehicles to transport this cash, the legacy banking industry produced 1.4 gigatons of carbon dioxide in 2020, or about 3.6% of global emissions that year. In stark contrast, Bitcoin produced less than 5% of that amount. Various projects are even trying to make bank offices, physical currency, and cash transportation fully redundant.
For example, Sanctuary Dex, a cryptocurrency app that allows users to make everyday purchases with cryptocurrencies, is making cryptocurrency mainstream, which could eventually lead to banks being replaced. This could drastically reduce energy consumption in the financial sector.
Furthermore, while Bitcoin mining does use a lot of energy, the energy that miners use is surprisingly clean. Up until recently, when China all but banned Bitcoin mining within its borders, half of global mining took place in the region of Sichuan, where abundant hydropower allowed mining to be based on 95% clean energy. Around the world, 75% of miners use renewable energy as part of their energy mix. In fact, up to 39% of Bitcoin mining is fully powered by clean energy — that’s twice as much as the U.S. economy.
Second, the Bitcoin energy picture is not only more climate-friendly than many make it out to be, but it can also proactively help accelerate a clean energy future.
The cost of renewables has plummeted by over 90% in the last decade. Yet further deployment is hampered by their inherent intermittency, which causes grid congestion and supply bottlenecks in the absence of advanced battery storage technology. The wind doesn’t always blow, and the sun doesn’t always shine, meaning that energy production is either excessively abundant or virtually nonexistent. Often, peak supply then fails to match peak demand. As a result, over 200 gigawatts of planned wind and solar capacity is delayed due to interconnection queues in just three U.S. grids. Until this issue is solved, our clean energy future is at risk.
That’s where Bitcoin mining comes in. Mining is a highly flexible, easily interruptible, location-agnostic activity. All it requires is the right computing equipment and an internet connection. A report by former Twitter CEO Jack Dorsey’s company Block highlights Bitcoin’s unique role as an “energy buyer of last resort.” In essence, hypermobile Bitcoin miners can pick up and transport themselves to areas with excess renewable energy generation, turning their mining rigs on and off at a moment’s notice to correspond with peak supply and demand. Instead of renewable energy operators being forced to pay others to take their excess supply to avoid frying the grid, or simply wasting the energy, they can turn it into an economically productive activity: Bitcoin mining.
This would provide a huge economic, as well as logistical, boon for clean energy deployment. The delayed capacity of wind and solar power in those three U.S. grids is twice that of the installed capacity there. Imagine if these grid inefficiencies were ironed out with the help of Bitcoin mining, while renewable energy providers found profitable avenues for their excess power. Investors would flock to deploy more wind and solar farms across the country. Bitcoin-supplemented renewable energy installations could transform from intermittent power stations into sources of stable, baseload energy.
Beware the anti-Bitcoin environmental doomsayers. The reality is that Bitcoin not only debunks the common energy fallacies being told about it, but it might well be a key to unlocking our clean energy future.
Chris Barnard (@ChrisBarnardDL) is the national policy director at the American Conservation Coalition and a frequent opinion contributor on environmental issues. Graham Laseter (@mgrahamlaseter) is the vice president of outreach at Sanctuary Dex.